Econpile (M) Sdn Bhd v Asm Development (Kl) Sdn Bhd (WA-28JM-32-12/2024)

ASM DEVELOPMENT (KL) SDN BHD (Company No.: 204867-W)

MUHAMMAD FIRDAUS BIN HASHIM (NRIC No.: 870214-08-7337)

MOHD IKRAM BIN RAHIM (NRIC No.: 841129-14-6219)

NURULJANNAH BINTI SULAIMAN (NRIC No.: 801008-56-5552)

FIKRIAH BINTI MOHD YUSOFF (NRIC No.: 820813-10-5226)

MUHAMMAD REDZUAN BIN MUHAMAD NOR (NRIC No.: 781021-10-5835)

IRA FARINA BINTI MOHAMED JASMANI (NRIC No.: 841203-13-5260)

SOONG CHING NYIK (NRIC No.: 821003-13-5866)

PUSHPA RANI A/P CHENAYAH@RAMU (NRIC No.: 700422-10-5484)

JEFRY BIN MOHD JOHARI (NRIC No.: 740529-07-5269)

FOONG SOON FEI (NRIC No.: 910422-05-5275)

WONG LI GINN (NRIC No.: 920609-10-5518)

WONG CHIN YAP (NRIC No.: 940321-01-5431)

WONG CHIN HAU (NRIC No.: 920519-01-6503)

LEE BOON PIN (NRIC No.: 901120-01-6479)

PUI YAH YIN (NRIC No.: 790325-13-5464)

NORAZIAH AZMIN BINTI ABD LATIF AZMI (NRIC No.: 810602-08-5246)

MAS HADI BIN SAHRUDIN (NRIC No.: 810117-10-5653)

HENG YAN HONG (NRIC No.: 920506-08-5796)

PUANESWARAN A/L M RAJENDRAN (NRIC No.: 810611-01-5135)

RADHA A/P KODIAPPAN (NRIC No.: 810806-10-5990)

WONG SEOW LOO (NRIC No.: 730318-01-5573) ...RESPONDENTS GROUNDS OF JUDGMENT

The underlying originating application is an Originating Summons filed by the applicant on 9.12.2024 (“Encl 1”), by which the Applicant (“Econpile”) applied for the appointment of a Judicial Manager (“JM”) over the 1st Respondent/debtor company (“ASM”) under s. 405 of the Companies Act 2016 (“CA 2016”). The contest between the debtor company, ASM, and the creditor-applicant, Econpile, was heavily fought.

On 6.1.2025, Econpile also filed a Motion against ASM in Enclosure 11 (Encl 11) under s. 405(5)(b) and/or the inherent jurisdiction of Court for the appointment of an interim judicial manager (“IJM”) over ASM pending the disposal of Encl 1.

On 21.7.2025, I granted Encl 11. My Grounds are set out in Econpile (M) Sdn Bhd v ASM Development (KL) Sdn Bhd & Anor [2025] MLJU 2914 (ASM No. 1). I appointed Sundarasan Arumugam, a licensed liquidator, of Sundar & Ling Insolvency PLT as the IJM.

On 19.1.2026, at the hearing of Encl 1 for the JM proper, I made the order under Encl 1 appointing the JM proper. By Encl 254, ASM appealed. These are my Grounds.

All references herein to sections are with reference to sections of CA 2016. The contents of these Grounds are set out in the table below. Contents Para No INTRODUCTION 1-5 BACKGROUND FACTS 6-9 The Pre-conditions 10-14 THE IJM PRELIMINARY REPORT 15-26 CONCLUSION 27

The background facts are set out in my judgment on Encl 11 (ASM No. 1) at paras 9 to 20.

Encl 1 prays for a JM Order to be made under s. 405. The Court’s power to appoint a JM is governed by s. 405.

S. 405(1) provides: “Power of Court to make a judicial management order and appoint a judicial manager

(1) Where a company or its directors, under a resolution of its members or the board of directors, or a creditor, including any contingent or prospective creditor or all or any of those parties, together or separately, makes an application under section 404, the Court may make a judicial management order in relation to the company if-

the Court is satisfied that the company is or will be unable to pay its debts; and

the Court considers that the making of the order would be likely to achieve one or more of the following purposes:

the survival of the company, or the whole or part of its undertaking as a going concern;

(ii) the approval under section 366 of a compromise or arrangement between the company and any such persons as are mentioned in that section;

(iii) a more advantageous realisation of the company's assets would be effected than on a winding up.

Before I deal with s. 405 in detail, I should note that Econpile does not rely on s. 405(1)(b)(ii) and no evidence was led that there was a scheme of arrangement pending approval under s. 366. Secondly, Econpile does not say that the appointment of the JM will be in the ‘public interest’ within s. 405(5)(a).

First, I am satisfied that ASM is unable to pay its debts within s. 405(1)(a), the first pre-condition. I held in ASM (No. 1) in paras 44 to 47 that Econpile may properly consider that ASM was unable to pay its debts. The basis was primarily because there are 2 outstanding CIPAA Orders, which are incidentally, ‘undisputable’ in a winding up (at paras 10 to 12 of ASM (No. 1)). I am satisfied that ASM is unable to pay its debts considering the 2 unsatisfied CIPAA Orders. In as far was Justice Murad’s contrary finding on 30.09.2024 (see Encl 16 para 9.3, Exhibit A-8) in ASM’s failed JM application, I do not have the benefit of full grounds nor I am unaware of whether the 2 CIPAA awards were brought to his attention.

Secondly, I needed to consider that the second pre-condition, that the making of a JM Order would be ‘likely to achieve’ the survival of the company or the whole or part of its undertaking as a going concern; or that a more advantageous realisation of ASM's assets would be effected than on a winding up.

I have already found a prima facie case for the appointment of a JM under s. 405 in ASM (No. 1) at paras 84 to 90. In this respect, I relied on the Preliminary Proposals of the nominated JM to show that a prima facie case was made out for the survival of ASM or its undertaking as a going concern.

I have dealt with the burden that needs to be discharged under s. 405(1) in several decisions including Maju Holdings Sdn Bhd v Bridgex Sdn Bhd & Ors [2026] MLJU 173 at paras 33 and 34 and Pembinaan BY Sdn Bhd v Minda Muhibah Sdn Bhd & Anor [2025] MLJU 4147 at para 84. In short, the burden is that there is a ‘real prospect’ or that it is ‘more probable than not’ that the survival of ASM as a going concern will be achieved.

I also found in Bridgex (supra) at paras 28 and 29 that ‘survival’ as a ‘going concern’ means to be able to carry on business in the future as a healthy solvent company, see also Wong Chee Lin J’s judgment in Leadmont Development Sdn Bhd v Infra Segi Sdn Bhd and another suit [2019] 8 MLJ 473.

During his appointment as the IJM, Mr. Sundarasan prepared a Preliminary Report on the Financial Position of ASM dated 2.12.2025 (“IJM Prelim Report”). It is a comprehensive report consisting of 4 Volumes (Encl 185 to 188). I have examined the IJM Prelim Report and I find that ex facie, it appears to be credible. Indeed, there is no evidence to suggest that the IJM was anything but independent and professional.

The preliminary recommendation of the IJM on the rehabilitation of ASM is at para 10. It provides as follows: “10.0 IJM’s Preliminary Recommendation on Rehabilitation of

10.1 Rehabilitation It is our preliminary opinion that ASMKL’s rehabilitation stands a high probability of success based on the following: - a. Maju Triangle Land (PN51515) – indicative market value at RM500 per square feet, amounting to RM325,000,000.00; b. Maju KL Land (PN51536) – indicative market value at RM300 per square feet, amounting to RM182,000,000.00; c. Combined Total Land Value (PN51515 & PN51536) at market value is RM507,000,000.00. d. Maju Triangle Land – status of land as empty parcel, unencumbered and its strategic location will significantly boost the probability of disposal at market value. e. Maju KL Land – status of land as unencumbered and its strategic location allows for a revised project proposal to be developed and considered to facilitate the rehabilitation of the Maju KL Development. f. In addition to the value of the parcels of land, the rehabilitation perspective will take into account the Gross Development Value (“GDV”) and market potential for both parcels of land. Such perspective can conservatively result in a GDV of RM3 billion and above from the development of both parcels of land. This perspective alone renders the rehabilitation of ASMKL to be absolutely viable. g. From our preliminary findings, there are debts of approximately RM235,254,022.01 allegedly owing as Intercompany Debts, approximately RM26,041,028.54 allegedly owing to a related company for contract works and RM147,113,422.96 allegedly owed to Tan Sri Abu that needs to be reviewed and verified. These figures do not include all other creditors listed in ASMKL’s representations in three (3) Creditors List that needs to be reviewed and verified. Thus, ASMKL’s actual debt/liability exposure may be significantly lower than that represented by ASMKL at this material time. h. It is our preliminary opinion is that ASMKL’s financial and operational challenges have been caused by its management and Board of Directors. This is also reflected in their misrepresentation of crucial financial information to the Court. i. It is our view, the best chance of rehabilitating ASMKL is not through its current management and Board of Directors. j. Thus, from a comprehensive determination of the financial position of ASMKL, a favourable net asset position together with the disposal and/or development of PN51515 and PN51536, clearly suggests the rehabilitation of ASMKL as being highly viable. …”.

At para 10.2, the IJM took the view that the rehabilitation by a JM would be more beneficial to ASM and its creditors than a winding up. In short, the IJM took the view that, inter alia, there probably was a need for a sale of the Maju KL Land by the Liquidator, which may not achieve its true value.

I accepted the IJM’s conclusions that the rehabilitation of ASM was highly viable.

In my judgment, it is perfectly acceptable to rely on the conclusions of the IJM in its Prelim Report. As I said this in ASM (No. 1) at paras 56 and 57: “56. … a preliminary report of the proposed JM is also not formally due at the initial application under ss 404 and 405.

It would, however, be very useful to the Court if such a Preliminary Report is made available to the Court. In Novabrite Lighting (supra) at para 50, I agreed with the approach in Re Biaxis (M) Sdn Bhd [2022] 7 MLJ 443 (at paras 14 and 15) and that in Federal Power Sdn Bhd v Dara Consultant Sdn Bhd [2022] 7 MLJ 11 563 at paras 23 and 24, that a preliminary report by the Nominated JM (although not formally required) would provide an objective and professional view that would be extremely useful in a case such as this, where the issue whether section 405(1)(b)(2) is live, i.e., whether the JMO will likely achieve the survival of the company.”

Out of completeness, it is important to note that the IJM complains that he did not receive full and timely disclosure of documents from management, see paras 6 and 7 of Section 9.1 and indeed , the IJM took the view that there has been material non-disclosure in ASM’s Audited Financial Statements (“AFS”), see Section 8.3 (amounts owing to director) See Section 8.4 (Other Payables). The IJM emphasised the need for full disclosure to determine ASM’s financial position. The IJM recommended the following next steps. “11.0 IJM’s Proposed Next Steps

11.1 Determination of ASMKL’s Financial Position

For the IJM/JM or any other proposed statutory officer to determine the financial position of ASMKL, actions including but not limited to the following is required: - a. Unrestricted access to the accounting, operational, legal, secretarial, and other records of ASMKL; b. Submission of Statement of Affairs by the Directors and Officers of ASMKL as referenced in Section 418(2)(3) and Section 419 of the Companies Act 2016; c. Delivery of books and records of ASMKL in accordance to Section 427 of the Companies Act 2016; d. Review and verification of ASMKL’s records to determine liability exposure and authenticity of ASMKL’s debts; e. Conduct and/or appoint an independent party to conduct a forensic audit of ASMKL’s financial records; f. Conduct a proof of debt exercise to review and verify claims of alleged creditors; and g. Conduct valuation of ASMKL’s assets.

For the IJM/JM to attend to the above actions, assuming that unrestricted access and cooperation from ASMKL’s Directors is forthcoming, the IJM/JM would require approximately 90 - 120 days to conduct the forensic audit and submit a detailed report on the financial position of ASMKL.

11.2 Rehabilitation of ASMKL For the IJM to provide a definitive opinion on the viability of the rehabilitation of ASMKL, the IJM/JM will have to undertake actions including but not limited to the following: - a. To explore feasible avenues to maximize the value of ASMKL’s assets including but not limited to disposal or entering into a venture towards jointly developing PN51515(“the Maju Triangle Land”); b. Conduct a detailed review and verification as stated in Section11.1 of this Preliminary Report to arrive at ASMKL’s actual financial position; c. To obtain requisite unrestricted access and resources to independently assess the market value and possible disposal of PN51515 at the best possible value, considering prevailing market conditions and ASMKL’s financial requirements and/or obligations; d. Obtaining detailed information on the Maju KL Development and the Maju Triangle Land to secure potential joint venture partners and/or investors; e. Obtaining detailed information and data on the status of the Maju KL Development such as financial projections, project timelines, market analyses and all relevant legal and/or regulatory information that is currently not available; f. To conduct a detailed assessment of the development works carried out at Maju KL including but not limited to structural works, electrical works and earth works. g. To engage and/or appoint professionals, industry experts, and other prospective stakeholders to actively preserve and/or improve ASMKL’s operations and business prospects while exploring different avenues and/or ideas for the overall viability of the projects. However, for a successful rehabilitation of ASMKL, based on our preliminary findings and subject to a detailed review and verification, we are of the opinion that the current management and Board of Directors of ASMKL should not be allowed to pursue any disposal of assets and settlement of creditors proposal.”

While I took the view that the preconditions to the appointment of a JM have been met, s. 405 provides that the Court ‘may’ make an order for a JM. In other words, I still have a discretion to appoint the JM notwithstanding the preconditions have been met. In this regard, I refer to my findings on the appointment of the IJM in ASM (No. 2) (supra). In short, the test (at para 70) was whether the affairs of ASM should remain in the hands of management or whether it should be placed better placed in the hands of an independent professional.

I held that it should not remain in the hands of management and should be placed in the hands of the IJM. I expressed concerns in ASM (No. 2) (supra) of serious and unexplained discrepancies in ASM’s financial disclosures, including inconsistent and shifting creditor lists, (paras 21 to 26), substantial unjustified reclassification of related-party liabilities from non-current to current liabilities (paras 27 to 30, paras 100 – 103), the sudden introduction of extremely large related-party “interest on advances” to a director (of over RM237 million) not reflected in earlier AFS, (para 25(b), paras 103 –

15 23. I held that these matters raised legitimate and serious concerns as to the accuracy, reliability, and integrity of ASM’s financial position as disclosed.

The IJM in the IJM Prelim Report, largely confirmed these concerns. In particular, the IJM confirmed that: a. there were multiple, inconsistent creditor lists, with material discrepancies as to the identity, classification, and quantum of debts, rendering it impossible to ascertain ASM’s true liabilities, see Section 6.2, p 29; b. substantial sums described as intercompany and related-party debts lacked proper contemporaneous documentation or commercial justification, raising concerns as to their bona fides and treatment, see Section 7.1 pp. 30 to 33; c. ASM’s audited financial statements, reflected shifting classifications of liabilities and unexplained movements, undermining their reliability as a true reflection of ASM’s solvency position, see Section 8.2 to 8.5; and d. Management should not be allowed to pursue andy disposal of assets, see conclusion to Section 11.2.

The IJM further recorded that ASM’s true financial position could not be accurately determined without full and unrestricted access to the company’s books, records, and related-party transaction documents, and that the existing disclosures were insufficient for any meaningful assessment of solvency or restructuring viability.

In my judgment, I was in no doubt that my discretion should be exercised in favour of appointing a JM. In this respect, I do not accept ASM’s 2 grounds for resisting Encl 1 in para 3 of ASM’s Consolidated Submissions in Encl 250. a. In response to the First Reason, there is no evidence to suggest that the appointment of the JM was to take control of ASM to proceed with the auction of Maju Triangle for its own benefit. A similar complaint was also raised on Encl

I rejected it at paras 115 to 118 of ASM No. 1 as the proceeds of any sale will be distributed to all creditors pari passu. b. Further, there is no basis for alleging that Encl 1 was filed for collateral purposes as the decision in Encl 11 was wholly justified for the reasons in ASM (No. 1), the findings in the IJM Prelim Report and for the reasons stated herein, fully justifying the appointment of the JM under Encl 1. I cannot see any real predominant collateral purpose other than to obtain a JM over ASM. c. In response to the Second Reason, for the reasons stated herein, the appointment of the JM by this Court under s. 405 has been more than justified.

Accordingly, I granted prayer 1 of Encl 1 appointing the JM, with costs of RM15,000.00 against ASM subject to allocatur. Dated the 9th day of March 2026 ........................tt............................ YA TUAN SAHERAN SUHENDRAN JUDICIAL COMMISSIONER OF THE HIGH COURT (COMMERCIAL 11) (INSOLVENCY 2) OF KUALA LUMPUR IN THE TERRITORY, MALAYSIA Counsel for the Applicant: Solicitors: Dato Arthur Wang Ming Way & Vicky Ong Xiao Qiu Messrs. Arthur Wang, Lian & Associates (Kuala Lumpur) Counsel for the 1st Respondent: Solicitors: Dato Jasbeer Singh, Nakeeran Kumar Kanthavel & Adlina (PDK) Messrs. Jasbeer Nur & Lee (Kuala Lumpur) Counsel for the (2nd & 11th Respondent) to [22nd Respondent (mob for R12)]: Solicitors: Amirah Najihah Ameruddin Messrs. Y.Y. Ho & Lee (Kuala Lumpur) Counsel for the 3rd to 10th Respondent: Solicitors: Sharazi Mohd Shariff Messrs. Sharazi & Co (Kuala Lumpur) Counsel for the JM: Solicitors: Harleen Kaur Messrs. Vin Partnership (Kuala Lumpur) Case References: • Econpile (M) Sdn Bhd v ASM Development (KL) Sdn Bhd & Anor [2025] MLJU 2914 • Leadmont Development Sdn Bhd v Infra Segi Sdn Bhd and another suit [2019] 8 MLJ 473 • Maju Holdings Sdn Bhd v Bridgex Sdn Bhd & Ors [2026] MLJU 173 • Pembinaan BY Sdn Bhd v Minda Muhibah Sdn Bhd & Anor [2025] MLJU 4147 Legislation References: • Companies Act 2016 (“CA 2016”) Decision Date: 19th January 2026